Market Roundup
- EUR/USD -0.2%, USD/JPY +0.2%, GBP/USD -0.2%, DXY +0.2%,
- DAX +0.2%, Brent -0.4%, Gold -0.2%, Copper +0.3%
- EZ Dec Eurostat Trade NSA 28.1bln vs previous 25.9bln. 22.8bln f/c
- UK Dec earnings growth, +2.6% vs previous +2.8%. +2.8% f/c
- UK Jan claimant count unemployment -42.4k vs previous -20.5k revised +0.8k f/c
- ONS says claimant count volatile due to rollout of universal credit system
- Markit UK household finance index falls to 42.5, from 43.6
- Swedish repo rate unchanged at -0.50%. Floden against extended FX intervention mandate
- Riksbank's Ingves - Swedish crown has not strengthened all that much since Dec
- M&A: JP SoftBank has agreed to buy Fortress Investment for USD 3.3bln
- Ex-BOJ Shirai: BOJ must raise yield target, slow bond buying
- BOJ Gov Kuroda no plan to raise BOJ yield targets just because global interest rates are rising
Economic Data Ahead
- (0830 ET/1330 GMT) The Federal Reserve Bank of New York is expected to report that manufacturing activity in New York State grew 7 percent in February after rising 6.5 percent in January.
- (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.1 percent in January after advancing 0.6 percent in December. While excluding autos, retail sales are likely to have gained 0.4 percent, after surging 0.2 percent in the previous month.
- (0830 ET/1330 GMT) The U.S. consumer price index likely increased 0.3 percent in January after posting similar gains in November. while in the 12 months through January, the CPI is expected to have risen 2.4 percent. Excluding food and energy, the core CPI probably rose 0.2 percent, matching the gain in the previous month.
- (0830 ET/1330 GMT) Statistics Canada releases manufacturing shipments data for the month of November. Manufacturing sales are likely to have increased 0.1 percent after rising 1.5 percent in November.
- (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.1 percent in January, after increasing 0.8 in the prior month.
- (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 75.6 percent in January from 75.5 percent in December.
- (0930 ET/1430 GMT) The Conference Board releases Britain's Leading Economic Index for the month of January. The index remained unchanged in the prior month.
- (1000 ET/1500 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.4 percent in December, after rising 0.7 percent in November.
- (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index rose to 67 in February, after posting a similar increase in January.
- (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending February 3.
- (1630 ET/2130 GMT) New Zealand will release its Business PMI index for the month of February. The index stood at 54.5 in the previous month.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending February 10.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending February 10.
Key Events Ahead
- (0945 ET/1445 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.475 bn)
- (1000 ET/1500 GMT) Federal Reserve Chair Janet Yellen will speak on the second day of her congressional testimony, before the House Financial Services Committee in Washington.
- (1200 ET/1700 GMT) Boston Federal Reserve President Eric Rosengren speaks before a New York Association for Business Economics luncheon.
- (1245 ET/1745 GMT) Philadelphia Fed President Patrick Harker talks about the economic outlook before the La Salle University 16th Annual Economic Outlook event.
- (1915 ET/0015 GMT Federal Reserve Bank of New York President William Dudley will participate in a chat organized by the Cornell College of Business and the Johnson Club of New York City.
FX Beat
DXY: The dollar rose to multi-week high versus its major peers as hawkish comments from Fed chair Yellen reinforced positive outlook and reaffirmed market expectations of a faster pace of Fed rate-hike in 2017. The greenback against a basket of currencies traded 0.2 percent up at 101.46, having hit a high of 101.51 earlier in the session, it’s strongest since Jan. 20. FxWirePro's Hourly Dollar Strength Index stood at 74.66 (Bullish) by 1100 GMT.
EUR/USD: The euro slumped to multi-week lows as the dollar bulls drove the greenback to fresh 4- week highs versus a basket of currencies. The major failed to benefit from a better Eurozone trade balance report, as Yellen’s signals on the U.S. rates hikes this year pushed the treasury yields and the dollar higher. The European currency declined 0.2 percent to 1.0548, having hit a low of 1.0546 earlier, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at -67.21 (Bearish) by 1000 GMT. Any violation below 1.05800 confirm major weakness, a decline till 1.0500/ 1.04500 (Jan 11 low) is possible. On the higher side, any break above minor trend line resistance 1.06100 will take the pair till 1.06250 (200- H MA)/1.0680 (55- day EMA)/1.06990 (200- H MA)/1.07386 (61.8% retracement of 1.08288 and 1.05880).
USD/JPY: The dollar rallied to a near 3-week high as hawkish comments from the Fed Chair Janet Yellen provided an upbeat outlook on the health of the U.S. economy and revived hopes for a Fed rate hike action at March meeting. Moreover, positive sentiment around equity markets continued to weigh on the safe-haven appeal of the Japanese yen. The major trades higher at 114.54, having hit a high of 114.59 earlier, it’s highest since Jan 30. FxWirePro's Hourly Yen Strength Index stood at -79.07 (Bearish) by 1000 GMT. The major resistance is around 114.23 (daily Kijun-Sen) and any break above will take the pair till 115.35/116. On the lower side, minor support is around 113.04 (daily Tenken-Sen) and any break below 113 will drag it till 112.05/111.48.
GBP/USD: Sterling tumbled to a 1-week low after data showed U.K. wage growth slowed than expected in the fourth quarter of 2016. The economy's average weekly earnings rose 2.6 percent year-on-year in the fourth quarter of 2016, against expectations for a 2.8 percent rise. Sterling trades 0.3 percent lower at 1.2430, having hit a low of 1.2419 earlier, it’s lowest since Feb. 7. FxWirePro's Hourly Sterling Strength Index stood at -121.35 (Highly Bearish) by 1000 GMT. The pair's upside capped by 100 –day EMA and any break above will take it till 1.26750/1.27060 (Feb 2 high). The minor resistance is around 1.2474 (21- day EMA) and any break above targets 1.2550/1.25850. On the lower side, next immediate support is around 1.2430 (38.2% retracement of 1.19860 and 1.27060) and any break below will drag it down till 1.2345 (Feb 7 low)/1.2300. Against the euro, the pound trades flat at 84.83 pence, having hit a low of 85.29 in the previous session.
USD/CHF: The Swiss franc declined, extending losses for the fifth consecutive session, as the dollar rallied across the board on the back of hawkish comments from Fed Chair Janet Yellen. The major trades 0.3 percent higher at 1.0090, having touched a high of 1.0097 earlier in the session, its highest since Jan. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at -26.93 (Neutral) by 1000 GMT. The minor weakness can be seen below 1.0000 (100- day EMA) and any break below will drag the pair till 0.9950/0.9900. On the higher side, 1.01225 will be acting as immediate resistance and any break above this level will take it till 1.01588 (61.8% retracement of 1.03435 and 0.98611)/1.0200.
AUD/USD: The Australian dollar rose, extending yesterday’s recovery mode, amid risk-on market profile across the financial markets. The Aussie rallied 0.25 percent to 0.7676, having hit a high of 0.7696 in the previous session, its highest since Feb. 3. FxWirePro's Hourly Aussie Strength Index stood at 132.30 (Highly Bullish) by 1000 GMT. On the lower side, the major support stands at 0.7605 (Feb 7 low) and any break below will drag the pair down till 0.7585 (21- day EMA)/0.7500. The minor resistance is around 0.7700 and a break above will take it till 0.7748/0.77783 (Nov 8 high).
NZD/USD: The New Zealand dollar edged up, retreating from a near 4-week low hit in the previous session, as risk-on market sentiment boosted the bid tone around the Kiwi. The Kiwi trades up at 0.7172, having hit a low of 0.7134 on Tuesday, it’s weakest since Jan. 20. FxWirePro's Hourly Kiwi Strength Index was at 29.18 (Neutral) by 1000 GMT. Immediate resistance is located at 0.7193 (23.6 % retracement of 0.7375 and 0.7134), a break above could take it near 0.7218 (Feb 13 High). On the downside, support is seen at 0.7150, a break below could drag it till 0.7100.
Equities Recap
European shares gained in early trade, strengthened by banking stocks, while the dollar rallied across the board after Federal Reserve Chair Janet Yellen flagged a possible interest rate rise in March.
The pan-European STOXX 600 index increased 0.39 percent to 371.63 points, while the FTSEurofirst 300 index rallied 0.46 percent to 1,465.67 points.
Britain's FTSE 100 trades 0.49 percent up at 7,304.07 points, while mid-cap FTSE 250 rose 0.08 percent to 18,803.25 points.
Germany's DAX climbed 0.45 percent at 11,824.34 points; France's CAC 40 trades 0.43 percent higher at 4,916.71 points.
Tokyo's Nikkei advanced 1.03 percent to 19,437.98 points, Australia's S&P/ASX 200 index rose 0.90 percent to 5,807.30 points and South Korea's KOSPI jumped 0.17 percent to 2,078.65 points.
Shanghai composite index fell 0.2 percent to 3,212.99 points, while CSI300 index eased 0.4 percent at 3,421.71 points. Hong Kong’s Hang Seng added 1.2 percent at 23,994.87 points.
Commodities Recap
Crude oil prices declined, as concerns that OPEC would not be able to maintain its high compliance with output cuts weighed on market sentiment. International benchmark Brent crude was trading 0.23 percent lower at $55.66 per barrel by 0942 GMT, pulling away from a high of $56.85 hit on Friday, its strongest since Feb. 6. U.S. West Texas Intermediate crude fell 0.36 percent at $52.82 a barrel, after rising as high as $54.10 last week, its highest since Feb. 6.
Gold prices edged lower as the greenback strengthened after U.S. Federal Reserve Chair Janet Yellen hinted at a hike in interest rates in an upcoming meeting of the central bank. Spot gold fell 0.15 percent to $1,226.36 per ounce at 0947 GMT, having hit its lowest since Feb. 6 at $1,219.19 on Monday. U.S. gold futures rose 0.1 percent to $1,227.
Treasuries Recap
The U.S. Treasuries traded slightly lower as investors remain cautious ahead of the January consumer price inflation and retail sales data, scheduled to be released later in the day. The yield on the benchmark 10-year Treasury rose 1/2 basis point to 2.48 percent, the super-long 30-year bond yield also traded 1/2 basis point higher at 3.06 percent while the yield on short-term 3-year note remained nearly 1/2 basis point higher at 1.53 percent.
The UK 10-year gilt yields slumped, following slight weakness in the country’s labor market, disappointing what markets had initially anticipated. Also, investors remain keen to focus on the January retail sales, scheduled to be released on February 17. The yield on the benchmark 10-year gilts, jumped 2-1/2 basis points to 1.28 percent, the super-long 30-year bond yields also surged 2-1/2 basis points to 1.97 percent and the yield on the short-term 2-year too edged higher by 2-1/2 basis points to 0.11 percent.
The German government bunds plunged following expectations of an improvement in the country’s trade balance during the month of December. The yield on the benchmark 10-year bond, rose nearly 1 basis point to 0.33 percent, the long-term 30-year bond yields also jumped 2 basis points to 1.13 percent while the yield on short-term 4-year bond moved higher by over 1-1/2 basis points to -0.61 percent.
The Japanese government bonds trended modestly lower, tracking weakness in U.S. Treasuries amid a surge in equities as investors moved away from safe-haven assets after the Federal Reserve Chair Janet Yellen concluded a hawkish testimony released later yesterday. The benchmark 10-year bond yield, hovered around 0.09 percent, the long-term 30-year bond yields rose over 1 basis point to 0.90 percent and the yield on the short-term 1-year note also traded 1/2 basis point higher at -0.28 percent.
The New Zealand government bonds closed high as investors remain cautious ahead of the Q4 retail sales, scheduled to be released on February 17. Also, markets have largely shrugged off the Federal Reserve Chair Janet Yellen’s hawkish testimony released later yesterday. The yield on the benchmark 10-year bond, fell 1 basis point to 3.32 percent at the time of closing, the yield on 7-year note also slid nearly 1 basis point to 2.89 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.24 percent.
The Australian government bonds plunged, tracking softness in U.S. Treasuries after the Federal Reserve Chair Janet Yellen presented a hawkish testimony before the Senate Banking Committee. Also, investors are awaiting the country’s employment report, scheduled to be released on Thursday. The yield on the benchmark 10-year Treasury note, jumped 5 basis points to 2.80 percent, the yield on 15-year note also surged 5 basis points to 3.24 percent and the yield on short-term 2-year rose 3 basis points to 1.87 percent.
